The lovely Cafe Paludan in equally lovely Copenhagen is about as far removed from recessionary Britain as it gets. Located in the city's medieval student district, it's full of youthful, well-groomed Scandinavians chatting away without a care in the world amid tasteful Bohemian decor.

"I've been out more during my time in Copenhagen than during the rest of my degree combined," says Kiera Taylor, a Kent University law student doing an Erasmus exchange year in the city, over a beer in the cafe. In common with all British Erasmus students, Taylor hasn't had to pay any university fees during her year abroad and has received a grant of around €4,000 (£3,200) towards her living expenses. It seems like a great deal. "It is," says Taylor, "although Copenhagen is very expensive. Plus I've spent a lot of the grant on flights back to the UK for training contract and vacation scheme interviews."

The airfares have been worth it, though, with Taylor in receipt of vacation scheme offers from a pair of top City law firms. She reckons doing Erasmus has helped her stand out in a congested graduate recruitment market. "The partners who have interviewed me have all been very interested in what I have learned from spending time abroad," she says.

For students who go to countries like Denmark where English is widely spoken, the Erasmus programme tends to be less about developing language skills and more about getting a taste of a different culture. One of the most useful experiences for Taylor and her course mate Cecilie Hansen Sørvig, a Queen Mary University London law student, has been the opportunity to sample the very different teaching style of Danish universities. At the University of Copenhagen's law school, many exams are conducted orally, while others are given to students on a 48-hour "take-home" basis. "I'll be better at studying as a result when I come back to the UK," says Sørvig. "The oral nature of the exams is fantastic interview practice," adds Taylor.

Such a winner has the Erasmus scheme been since it was introduced 25 years ago that the European Union is planning to extend it for the benefit of the growing number of jobless graduates across the continent. Under the proposed Erasmus For All programme, which is set to more than double Erasmus funding to €19bn (£15.2bn) between 2014 and 2020, graduates who don't have jobs are to be offered European Union-backed loans of around €12,000 (£9,600) to do masters degrees in other European countries. A portion of funding will also be reserved to help students study farther afield in locations like China and Brazil. Meanwhile, more money will be allocated to the pan-European work placements that take place under the existing Leonardo da Vinci framework, which will be subsumed into Erasmus. The extended scheme is due to begin in 2014.

British universities are welcoming the changes, which they believe will present a valuable additional set of options to jobless graduates. "At present there is so much competition facing law graduates, in particular," says Jill Marshall, senior lecturer in the law department at Queen Mary. "Students not getting training contracts or pupillages need something to do in the one or even two years they are increasingly having to wait to secure positions post-graduation." Tim Macklem, head of King's College law school, agrees: "A wider scheme could be an invaluable door opener," he says.

A word of warning, though: there is concern that the new masters arrangement could increase students' already high debt levels without giving them much to show for their investment at the end of the course. "We'd be neutral about the masters, which we don't view as intrinsically better than a year spent working in industry," says Edward Walker, graduate recruitment manager at corporate law firm Pinsent Masons. "Chances are, if you haven't met minimum academic requirements by the end of the Legal Practice Course (LPC), you're not going to reach it with a masters. And if you have reached it, but not got a training contract, the gap you have is not academics but elsewhere."

Still, with students able to minimise their spending on the new Erasmus For All scheme by choosing to study in countries like Norway (which is non-EU, but set to be included in the programme) where no tuition fees are charged for masters courses, many may find the lure of European cafes too tempting to resist.

Alex Aldridge is the editor of Legal Cheek. His trip to Copenhagen to attend a seminar on the occasion of the 25th Anniversary of the Erasmus programme was paid for by the European Commission.